Does it seem as if you've been paying your mortgage for the past several years with no end in sight?

The length of time it takes to pay off a mortgage depends largely on strategy and discipline.

As with any bill, proper money management and prioritizing are keys to eliminating debt. You may not realize it, but by managing your money wisely, you can pay off your mortgage in less than 15 or 30 years.

Get Your Amortization Schedule
Obtaining your amortization schedule is an important part of your payment process. It shows you how long you will pay a mortgage at a particular interest rate.

The amortization period represents the number of years that it takes to pay your mortgage in full (this includes both the principal and the interest).

You can save money by making larger payments each month. By paying an additional $65.00 each month toward a $100,000 mortgage with an eight percent interest rate, you will reduce a 25-year amortization to 20 years and also reduce the amount of interest paid from $128,963 to $98,806. That's a savings of $30,157!

When you send in your payment, avoid writing two checks; include the extra amount in the check you regularly send and inform the bank to apply the extra money toward your principle. Most lending institutions rarely refuse payments like these.

Make Payments More Frequently Than Once A Month
Another savings strategy is to make frequent payments. You will reduce your amortization by paying your mortgage on a weekly or bi-weekly basis instead of once a month. For example, the monthly payment for a $100,000 mortgage over a 25-year period, with eight percent interest is approximately $772. By making bi-weekly payments of $386, your amortization is reduced to 20 years.

The beauty of this strategy is that the length of your mortgage is reduced by five years without adding more money to it. It stands to reason that if you pay an additional $32.50 toward a bi-weekly mortgage payment, you cut your mortgage by 10 years.

Most people can come up with an extra $32.50 each pay period—especially when unnecessary expenditures are cut out.

Pay The First Payment Immediately
Another effective mortgage debt-reduction strategy is to make the first loan payment the day it is activated or when you close on your home. Using this method of pre-payment will drastically reduce the loan's length.

For example, in the case of a $100,000 mortgage with an interest rate of 14.5 percent, you will actually end up deducting four years and six months from the term of your loan by simply making one whole mortgage payment up front.

Check with your lender to see if they offer pre-payment as an option—some lending institutions don't. If so, take advantage of this money-saving strategy!

Although the process of paying off your home may sometimes seem tedious and frustrating, you can make progress when you adjust your spending to aggressively pay off your principal.

It will take discipline to see progress; however, if you stay focused, you will be on your way to owning a debt-free home!

First published in the May 2003 issue of
Changing Your World Magazine
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